Securing financing for a used car purchase can be a bit of a challenge, especially when you have so many options to choose from.
Selecting a credit union used union car loan can benefit you in many ways. However, you want to be sure you choose an institution that provides the most advantageous options for your situation while keeping your best interests at heart.
Why Choose A Credit Union Used Car Loan?
Before we get into how to choose a credit union for your used car loan, let’s first discuss why it’s a great choice over a national bank or similar institution.
Priority on members, not profits
The fundamental difference between credit unions and banks is the fact that credit unions are owned by their members, whereas banks are owned by a group of investors and shareholders. Banks have the pressure of making sure their shareholders see a return on their investment, and they often achieve that at the expense of their customers.
Credit unions, on the other hand, don’t have that kind of pressure to deal with. Since they are owned by their members, they have a higher incentive to give better rates, including those on used car loans.
With a credit union, you get local support. This includes more personalized member service, but many credit unions use local ties to benefit their members in other ways as well.
For instance, some credit unions that offer used car loans will help you find the perfect car dealerships in your area.
With their locally concentrated, personalized style of service, credit unions may also provide additional benefits to their members that simply do not exist in a national bank.
Both banks and credit unions are fully insured, meaning there’s little risk of loss when you join a credit union. However, since credit unions take on much less risk than national banks do, they have a lower chance of failing. This means you are typically better off obtaining credit union used car loans and other lending products.
How To Select A Credit Union For A Used Car Loan
Now that we’ve established the benefits of choosing a credit union over other types of institutions, let’s move on to comparing credit unions in terms of what they offer for used car loans.
Among the factors you’ll want to consider are rates, terms, additional offerings, and member service.
Credit unions, in general, offer lower rates than banks, but some have more competitive rates than others. Your hard-earned credit will be put to better use at an institution that has lower interest rates, rewarding your efforts with easier monthly payments and lower overall interest paid over the life of the loan.
In addition to lower interest rates, you’ll want to find an institution that provides flexible loan term options. The term of a used car loan is the time you have in which to repay it.
Longer loan terms give you more time to pay off the loan and lower monthly payments, though you do end up paying more interest in the long run. On the other hand, shorter terms mean higher monthly payments, but you’ll have less total interest to pay, and there’s less risk that you’ll end up upside down in the loan (i.e. owing more than your car is worth).
The right option for you depends on your current financial situation, and you’ll want to choose a credit union that’s flexible when it comes to loan terms.
Insurance and services
The rates and terms of the loans themselves should be advantageous for you, but it’s worth keeping an eye out for additional services as well.
Certain types of insurance—such as Mechanical Repair Coverage—may be added on to your loan to protect your investment, and lenders will often give special advice, guidance, and car buying services on top of financing.
Many of the offerings provided by credit unions are truly unique to the institution, so it’s worth shopping around to find one that has exactly what you want.
Perhaps more important than rates, terms, and services offered by the institution you choose is its member service. While credit unions tend to deliver better service than most national banks, that isn’t saying a whole lot in some cases.
You want an institution that values you as one of its members and that will work with you on an individual level to ensure you receive the best used car loan and services for your needs. This makes it easier to find the right financing options but also a more pleasant experience to service your loan long-term.
Getting The Best Used Car Loan For Your Needs
Getting the best used car loan to match your needs starts with finding the right credit union.
There are several tactics you can use to find the institution for you, including:
- Getting recommendations from friends and family
- Searching for local institutions
- Reading reviews
- Looking through each institution’s literature and offerings
Once you've found the best credit union for your needs, make a call and get started applying for your used car loan.